Archives For social impact

Lisa and Charly Kleissner

Sophisticated Investors like to think their portfolio risk has been carefully mitigated and hedged. For the average portfolio, however, standard risk calculations don’t necessarily include analysis relative to environmental and social  issues an investee company potentially faces, or even resource consumption analysis, yet all can have a significant impact on returns. This is particularly true of a long-term “buy and hold” investment strategy.

By contrast, impact investors believe not only that these factors weigh on a company’s returns, but also a positive screen for companies actively managing these risks can improve a portfolio’s performance.

Speaking in Hong Kong about their own 13-year journey toward an “Impact Portfolio” were Lisa and Charly Kleissner, founders of the KL Felicitas Foundation. As part of their mission, the Kleissners have urged audiences globally to think about how we can better deploy capital to help better steward the planet’s resources. On Tuesday, they spoke at a forum organized by the RS Group, hoping to advance the discussion in Hong Kong.

Today, the Kleissner’s foundation and personal portfolios, managed by San Francisco-based Sonen Capital, are more than 93 percent allocated across four different asset classes to “Impact Investments”, which signal the intent to generate both financial return and “purposeful, measurable, positive social or environmental impact”.

According to “Evolution of an Impact Portfolio: From Implementation to Results“, a report published by Sonen in October last year, the Kleissner’s portfolios have achieved index-competitive risk-adjusted returns, illustrating that, “impact investments can compete with and, at times, outperform, traditional asset allocation strategies, while simultaneously pursuing meaningful and measurable social and environmental impact”.

Their journey toward impact has not been easy, according to the Kleissners, Silicon valley denizens who both worked under Steve Jobs at Apple, among other firms. The process began with dim looks from early investment managers who wanted to focus only on returns.

“We wanted to know about the positive upside for communities, for the environment, from our investments,” Lisa said. “We wanted to make money and have positive impact but our early investment advisors had no idea how to achieve this.”

They sought an advisor who cared about impact. “We didn’t want someone who saw this as simply a job,” Charly said. “We want to change the world not just make money and our investment advisor needed to be a partner in this.”

The results were far-reaching, meaning investment policies needed to become impact investment policies, due diligence restructured, term sheets re-written, new monitoring and exit strategies developed. Sonen Capital was founded in response to this need.

The portfolios the Kleissners ended up with are far from US-centric, with more than 50 percent of investments made globally. Among those are holdings in renewable timber, carbon offsets, water and land use that is respectful of biodiversity. In other words, the Kleissners invest in companies that reflect positive impact. They have opted not to invest in coal-fired power plants or extractive industries.

Three percent of their assets are in early stage direct investments, reflecting their silicon valley, entrepreneurial background. Indeed, the Kleissners efforts to promote the impact sector has included investments of money and their own time in social enterprise incubators. These, and others, the Kleissners like to think of as “catalytic” investments that can lead to change.

Beyond the incubator model to support social enterprise development, the Kleissners  also have invested in helping to build networks of like-minded investors to share due diligence as well as in promoting intermediaries to help develop the impact sector.

“Development of these investor resources is critical,” Charly said, “We want people anywhere to be able to tap into the knowledge”, which is available on the KL Felicitas website.

Measurement, always a difficult discussion, is rigorous across the portfolios, captures trends across the sectors and then includes qualitative analysis, which involves telling the story from the numbers and more.

Charly spoke of impact investment as often an evolution of smarter philanthropy. He also spoke of the importance of collaboration between grantmaking and investment to widen impact, pointing to microfinance as an example of this and to social enterprises that can start life as a nonprofit but move into a more commercial space over time using blended capital.

Speaking in Hong Kong, the Kleissners said, was a learning for them, that having worked with an incubator in India over a number of years, the entrepreneurial context there was more familiar.

In China, where the environmental challenges are substantial and polluting companies numerous, an audience member pointed out that impact might also come from working with conventional companies to change their environmental and social practices, rather than shunning them altogether.

This is what the air should look like in HK but rarely does Photo by Ella Smith

Hong Kong finally has found its voice amid government inaction to  clean our air and protect our health. And long may it last – at least until we have real action to address the pollution.

Newspapers this morning featured banner headlines on air pollution, including the SCMP’s  “Clean-Air Targets Don’t measure Up” and then inside, “Gasp it’s Worse Than we Thought.”

Yesterday, the government said it would toughen its clean-air targets for the first time since 1987, but only marginally, and admitted they will still fall far short of World Health Organization standards.

And this four-and-a half-years after first engaging a consultant to review air quality objectives then launching a six-month public consultation that ended in late 2009. The environment secretary sat on the recommendations until yesterday and they were announced unchanged – by the consultation or time.

The new objectives impose tougher limits on the atmospheric concentration for seven pollutants including sulfur dioxide, nitrogen dioxide, carbon monoxide and lead.

For the first time the city also will measure airborne particles smaller than 2.5 micrometres in diameter, known as PM2.5. These are more harmful than the larger particles currently measured.

The government apparently also has identified 22 measures to help achieve the new standards, which are to be introduced over a three-year period after 2014. This will allow infrastructure projects to proceed without delay.

Thus the government, in reality, will allow our air to be made even dirtier while it finishes some mammoth construction such as the Hong Kong-Zhuhai-Macau bridge and a third runway at the airport.

Oh, and the steps to be taken apparently will extend the life expectancy of the average person in Hong Kong by one month.

Secretary for the Environment, Edward Yau, was quoted in the South China Morning Post as saying, “We have to understand that the ultimate WHO guidelines are a distant target” and pointing to regional pollution as the principal source of pollutants.

Yet 2007 research by Alexis Lau from the HK University of Science and Technology and Civic Exchange, “Relative Significance of Local Vs. Regional Sources: Hong Kong’s Air Pollution,” showed that 53 percent of the time the pollution that affects us most is locally generated by buses, trucks, shipping and power plants.

The basic, undisputed message for a long time has been, Hong Kong can do much to clean up its own air and improve the health of its residents.

Despite this, little has been done in recent years, despite urging from Clean Air Network, Civic Exchange, Friends of the Earth and many other environmental groups.

And herein lies the paradox: The HK government speaks and acts as though we are a developing nation, yet HK is one of the world’s richest cities. The government sits on reserves estimated at US$80 billion.

We are so rich in fact that last year the government announced that it would give a cash handout to each adult permanent resident (even those living abroad and those who patently did not need the extra money), of HK$6,000, or US$700. That massive handout cost the government HK$37.98 billion that certainly could have been used to better effect to clean our air.

Meanwhile, Roadside pollution levels reached a record high last year. The number of days that pollution was rated “high” hit 20%. That is five times more than in 2005. And, embarrassingly, the HK government is clearly playing catch up to Beijing, which in response to an online campaign earlier this month said it would provide hourly updates of PM2.5 measurements.

Clearly gone are the days when Beijing looked to Hong Kong for direction and innovation.

Meanwhile, the Civic Exchange yesterday said a revamped environmental index run by Hong Kong University researchers showed that air pollution here is more harmful than previously thought, costing HK$40 billion annually, up from previous estimates of HK$16 billion.

The number of premature deaths per year over the past five years should also be revised upward to 3,200 from 1,000, according to the Hedley Environmental Index. This, of course, is not information that the HK government is gathering.

The sad reality is that Hong Kong’s air has been deteriorating steadily over the past 20 years with almost no action by government to alter the trend.  Pollution now poses a serious threat to public health and we should be angry, very angry.

Forest Impact Bonds:

Lisa Genasci —  January 4, 2012 — Leave a comment

We have been thinking a lot about Social Impact bonds and how the concept might apply to conservation finance, which is something about which we ponder a great deal.

Why not a Forest Impact Bond, issued against promised aid streams from sovereign development banks wanting to mitigate climate change and/or promote forest conservation?

These could work in circumstances where communities are key to protecting High Conservation Value forest.

FIBs would be focused on impact-driven community development (schools, livelihoods, health, education) but linked also to real conservation outcomes.

Time is slipping as we try to establish the best way to protect ourselves at scale from climate change, manage and protect our forests for future generations.

The multiple challenges around forest conservation is something we’ve written about previously in this blog here and here.

In essence, the problem is how to compensate governments and landholders for the huge rewards they reap cutting trees from native tropical forests; how to balance development with conservation.

Since 57 percent of the world’s forests are located in developing countries, it is hard to make the economic argument that these areas should not be developed for the benefit of the national population.  Indeed, timber revenues represent the major, sometimes only, export commodity of a country.

The Commission on Climate and Tropical Forests has estimated  that 17 percent of greenhouse gas emissions – an amount equal to the transportation sector – are from deforestation.

At the same time, the scale of financing required to halve deforestation will reach US$30 billion annually by 2020, the U.S.-based commission estimated in the same report.

Only turning to the global capital markets will provide sufficient funding to meet the challenge deforestation presents today.  That strategy could include the use of bonds, which would allow the desperately needed investment at scale.

Communities and Livelihoods the Key to Conservation

Key to this discussion is that not only do governments and landholders need to be compensated for not chopping forests for timber, but local livelihoods are also often linked to forests.

Nearly 90 percent of the 1.2 billion people living in extreme poverty worldwide depend on forests, which provide them with building materials, food, coffee, cocoa, medicinal plants and income from other sources.

Without access to the forests not only do many of these people lose livelihoods but they also may lose their crops to droughts or floods as climates change with deforestation.

Thus communities living in and around forested areas are key to their protection.

Still, even with access to forests, local populations who face the immediate need of supporting their families often don’t recognize the value of conserving forests for the longer term because they cannot meet their immediate needs for food, housing, clothing and education, among others.

Thus, local communities need both education on the value of long-term forest conservation to their own lives (livelihoods, water etc) and help establishing alternative and sustainable income sources.

At the same time, battling to defeat poverty, poor nations argue they cannot be expected to forfeit income from economic activities that lead to deforestation, particularly since there are global  benefits from developing world forest services – carbon, water etc.

They have argued collectively that if global powers want to preserve the rainforests and their natural services provided then those must be paid for.


Rainforest Bonds Not a New Conversation

Indeed, for many years now there has been talk of rainforest bonds, which would help pay the large upfront capital expenditure required to invest in development, livelihoods, conservation to maintain the forests.

Under conventional thought, either forest carbon revenue or other sources of income such those generated by sustainable timber, agriculture or ecosystem service markets (water, biodiversity for example,) would repay investors.

But the conversation around REDD carbon has stalled with regulatory uncertainty. Additionally, in Asia certainly, we are a long way from any scalable ecosystem markets, while the significant upfront investment needed to promote agriculture as an alternative or to build local livelihoods to protect forests is just not available philanthropically.

And that’s just it…the bond conversation has gone on for years with significant players like the Prince’s Rainforest Trust and others eventually pulling back given the difficulties in identifying revenue streams that would work.

Turning to Forest Impact Bonds

So why not step back entirely from the conversation around how to make forests pay and look instead to the large sums promised by sovereign development banks at Copenhagen (US$4.5 billion) and other aid that has yet to find a home for want of knowledge of how to invest those funds with surety and with impact.

And that’s not surprising. Over the past two decades, substantial funds have flooded into Indonesian conservation  (usually to secure national parks or protect wildlife and its habitat) without corresponding transformational change. Over the same period, deforestation has only accelerated, fueled by burgeoning consumption, population explosion and massive urbanization.

So the problem remains, how to ensure that limited funding for conservation is spent with measurable and significant impact? How to balance development and conservation and raise the funds from global capital markets to pay for both?

Indeed, we must increase the availability of performance-linked finance to protect forests for local communities and local governments, in order to maintain them for global biodiversity and as carbon sinks.

In 2007, a similar discussion emerged in the UK around improving social outcomes and reducing uncertainty of funding for social services.

Shortly thereafter, London-based Social Finance introduced the concept of social impact bonds, which target funds to specific projects with measurable results.

If the identified targets are reached, the UK government saves on social programs and those savings are used to repay bond investors, in certain cases with interest. If targets are not reached, bond investors lose out as they would in any junk bond investment.

Turning to the U.S, in last year’s  budget speech, President Obama announced that he had set aside US$100 million for social impact bonds and at the same time two Boston-based companies have recently been established to apply the UK social impact bond concept to the U.S. context.

Why could this innovative approach to generating social impact in the UK and the U.S. not work also to protect forests in Indonesia, targeting communities and livelihoods but at the same time generating extra and measurable impact in conservation?

Given the argument above, and the lack of current appetite for REDD+ and other forms of eco-securitisation backed by forest assets or credits, might we then apply the social impact bond example to community development initiatives in a country like Indonesia?

In this scenario, international government funds, funds from multi-laterals with an interest in combating climate change and conserving  forests for future generations pool funds in an SPV that are then allocated to community development initiatives with specific parameters and measures of impact.

The key would be to persuade the local government to join what would essentially be billed as a development initiative but with additional conservation benefits.

The SPV funds would be available to repay investors in the event that the community development programs, livelihood initiatives, the conservation targets achieve desired results. In this way, the pooled funds are used only if they have been effective and only after impact has been achieved and quantified.

Country funds would likely have to be established separately, with their own fund administrators (local country officials?)  and project monitors.

An initial pilot would likely include just one country – Indonesia perhaps – and one specific target: perhaps livelihoods and education around several conservation areas.

For in-country implementing partners we could draw on local NGOs to support conservation (research and protection) and identify appropriate targets. Microfinance institutions could support business initiatives where appropriate and rural development organizations would help build agricultural businesses that local communities in Indonesia want to generate income.

Legal organisations would need to be employed to help sort out land-titling to establish a legal basis to land ownership. Education NGOs could be employed to boost local knowledge around conservation, while healthcare providers could support rural health development.

This would then be associated by local communities, along with improved education, for example, with conservation of their local forests.

So rather than trying to pry an uncertain financial return out of forest services or REDD+ (although if these markets develop in the future, certainly these could be added to SPV funds) we are trying  to achieve only effective allocation of government/multilateral resources  and measurable impact.

At the same time, however, there could be a return on investor depending on the effectiveness of the programs., while a tranche structure with different risk/return profiles could be used to simultaneously appeal to both groups.

The difference with the UK Social Impact Bond, of course, would be the potential for shared savings. Although it would be important to have local governments as key participants, it is unlikely their own development investments would make this worthwhile.

Who would buy Forest Impact Bonds?

There is growing interest on the part of institutional investors in markets where there are environmental and social as well as financial returns or where there are at least screens for negative impact.

According to Eurosif, total SRI assets under management increased dramatically from €2.7 trillion to €5 trillion, as of December 31, 2009. This represents spectacular growth of about 87% since 2007.

The sense is that when environmental social and governance issues start to affect share price or impact bottom lines boardrooms will take note.

Increasingly, SRI is a mainstream criterion in equity analysis and several stock exchanges have launched tradable indices that track SRI companies or ESG alongside financial performance.  And ratings agencies are emerging to rank companies on their ESG performance.

At the same time, part of the consideration around forests is that they have long carried appeal to institutional investors.

According to an article in The Banker from 2007, more than US$30 billion globally is invested in forest assets, although mostly through funds and largely in the US.

These investments generally offer competitive returns with low or negative correlation to traditional asset classes making them a counter-cyclical hedge.

In Summary…

  • A FIB is a contract with the public sector in which it commits to pay for improved environmental and social outcomes
  • On the back of this contract, investment is raised from investors motivated perhaps not only by commercial but also by environmental and social returns.
  • This investment is used to pay for a range of social outcomes such as poverty alleviation of local communities, improved health and education, all tied to and contingent on conservation of an area of high-conservation value local forest
  • The financial returns investors receive are dependent on the degree to which outcomes improve i.e, they may receive part or all of the initial investment back, and in some cases additional financial returns.
  • A FIB shifts emphasis from paying for inputs and outputs to paying for impacts
  • In its purest form, a FIB has a risk profile more similar to an equity investment than a debt investment

I’ve been thinking recently about Fiduciary responsibility and what that has come to mean over the past two decades of rapid growth.

I’ve been thinking about how and why the interpretation that has crept into investment culture over that period – simply to maximize rates of return  – has slowed an appreciation of investment that doesn’t cause social or environmental harm.

It goes without saying that this has also slowed investment that promotes social good as well as generating returns.

I’ve also been thinking that by itself  this narrow interpretation ignores both business risk and opportunity  – neither of which should be ignored considering the dictionary definition of fiduciary duty:  to act prudently.

Writing in a Capital Institute blog, Stephen Viederman, former president of the US-based Jessie Smith Noyes Foundation, argues that foundations should align program work with investment strategy – something that is all too rare.

“Foundation fiduciaries have an obligation to seek  ‘good’ and ‘competitive’ returns, not necessarily to maximize them,” he says.

Part of the problem has been the accompanying  “myth of financial underperformance from ‘social investing,’ a myth that still lies at the heart of the problem for finance committees who conveniently forget that two-thirds of traditional active managers underperform their benchmarks every year,” Viederman says.

“Yet the profit-maximizing argument–that you will underperform if you do sustainable investing–comes up time and time again in conversations and is never examined by the people who are making it.”

Indeed, most investors are not considering the business risk associated with investing, for example, in a power company, a textile operation or mining business in a region that is water scarce.

Most ignore the reputational risks associated with investing in factories or plants that are polluting, overly consumptive of resources, or engaged in bad labor practices.

“All investments are about the future, but most investment decisions are made on retrospective data, which as fund offerings make clear, are not predictors of future earnings,” says Viederman.

“We need to ask about …  ‘predictable surprises,’ which include climate change, the BP Gulf disaster and the financial bubble among others. …Any institutional investor who ignores them is in breach of their fiduciary duty. To be prudent, as in the prudent person, is in its original meaning, to be farseeing.”

The ADM Capital Foundation launched a web portal, China Water Risk, in October to provide investors and companies with information about water scarcity and pollution in China.

Part of the thesis behind the initiative is that better investment decisions produce better returns in the long run and these usually come with more information – and not the information investors traditionally have sought.

But, certainly, few could disagree that the regulatory environment is changing to reflect resource consumption and that water pricing in the near future will reflect scarcity.

Few could disagree that NGOs are increasingly sophisticated in exposing pollution incidents (see my blog posts on IPE’s Ma Jun and Apple, on Greenpeace’s Dirty Laundry and other reports) and that local protests in China are growing around pollution incidents.

Workers are no longer content to suffer exposure to hazardous chemicals silently, or work extraordinarily long hours without proper compensation.

All are, potentially, a drag on profits. Would it not then make sense for fiduciary duty to include analysis of  such risk?

Fully Risk-Adjusted Returns (FRR), as they might be called, should certainly not be lower as a result, indeed given the current and future challenges the world faces, they could even be enhanced by additional information.

For those who missed this, one company that is looking to consider the impact of production is PUMA, which earlier this year announced the results of an unprecedented environmental profit and loss screening.

This was a big step toward assigning economic value to resources consumed and to emissions. The value assigned was also a step toward determining the true cost of production of PUMA apparel and shoes.

Results from PUMA's Environmental Profit and Loss Analysis

The analysis showed that raw material production accounted for the highest relative impact of Greenhouse Gas Emissions and water consumption within PUMA’s operations and supply chain.

According to PUMA’s report, the direct ecological impact of company operations translated to the equivalent of 7.2 million euros of the overall impact valuation. An additional 87.2 million euros was distributed along the four-tier supply chain.

Thus, the overall environmental impact of GHG and water consumption amounted to 94.4 million euros. That compares to a third-quarter net profit of 82 million euros.

“By putting a monetary value on the environmental impacts, PUMA is preparing for potential future legislation such as disclosure requirements,” the company said.

“By identifying the most significant environmental impacts, PUMA will develop solutions to address these issues, consequently minimizing both business risks and environmental effects.”

Finally, a new and important report from IESE Business school, “In Search of Gama, an Unconventional Perspective on Impact Investing,” steps into the discussion with questions such as:

  • By focusing exclusively on the creation of financial wealth for individuals are financial markets destroying value for society?
  • Is social responsibility a component of investment that is necessarily detrimental to financial return?
  • Should changes be made in the taxation and supervision of financial transactions to account for financial markets’ responsibility to society?

Clearly, business as usual is no longer smart business and change is imminent. Considering the impact of investments and reconsidering how we make investment decisions will be the way forward.

Let’s start  by redefining fiduciary responsibility, considering Fully Risked Returns. Clearly, returns may actually be enhanced either when viewed through the lens of an appropriate risk framework/weighting or in reality as a result of a superior business environment.

I’m still surprised when other conservation funders or even NGOs ask us why we work to protect sharks, indicating that this is a “single-species” issue among a platform of ADMCF initiatives that generally is much broader in tone.

I’m surprised when we have to point out that there are at least 440 species of sharks and that as apex predators they are critical to the health of our oceans. This is in no way a single-species issue and ultimately is integrally connected to the health of our commercial fisheries.

The initiatives against consumption of shark fin soup we support have much more to do with protecting our oceans, which are in significant decline. At least a third of shark species are threatened with extinction and some species have dropped in numbers by as much as 90 percent in recent years.

Sharks cannot easily recover from overfishing because they reproduce slowly, taking years to mature and producing few offspring. If we continue to fish shark at current rates, they simply won’t be part of our ocean life in the not too distant future, with potentially disastrous consequences for us all.

For 400 million years sharks (despite their negative image largely, thanks to Jaws) have helped to maintain and regulate the balance of our marine ecosystems. We don’t know exactly what our oceans would look like without sharks but we do know there would be significantly less biodiversity. Studies have shown that regions where there are more apex predators have more biodiversity, while areas without them show clear absences.

Still, every year perhaps as many as 73 millions sharks are caught – tens of millions of these for their fins alone. Although many sharks are landed and brought to shore with their fins attached, in order to save space on fishing boats, in many instances sharks are finned at sea and the body is discarded into the oceans, meaning the sharks drown. Any food value in the large body is wasted.

And Based on FAO statistics, global shark catches are likely to be underestimated by an astonishing three to four-fold.

Hong Kong plays an important role, with 50 percent of the shark fin trade passing through the city – much of it re-exported legally or illegally to China and the rest consumed locally, mostly at wedding or corporate banquets in soup.

Shark finning is an issue that ADMCF has been working with local conservation groups to highlight and advocate against in Hong Kong. Over the past five years we have supported  research, appeals to the hospitality industry and rest of the corporate sector  to stop serving and consuming shark fin soup.

With local organizations we have worked to build awareness among the general public about the biodiversity consequences of decimating our shark populations. Legislators have been approached to push the Hong Kong government to consider at least ceasing the consumption of shark fin soup at government banquets – something that in reality should be easy since the dish is expensive!

Ultimately, of course, we would all like the Hong Kong government to follow the world trend and consider a ban on the shark fin trade in Hong Kong.

Earlier this year, Bloom released important research on local attitudes to shark consumption that was publicized widely in local Chinese and international media. This research fundamentally changed the debate– from shark fin as an untouchable cultural issue to a global concern characterised by changing local attitudes.

And in an encouraging recent decision, the Hong Kong & Shanghai Hotels announced a ban on shark fin at all outlets including its Peninsula hotels as of Jan. 1. This was a major shift and key step in engaging Hong Kong’s leading hotels on a collective ban. Conservation International and Bloom Hong Kong are organizing a meeting of top Hong Kong hotel executives in January  2012 to discuss what initial steps they might take toward removing shark fin from restaurant menus.

Meanwhile, WWF and the HK Shark Foundation have managed to sign up more than 110 companies and industry groups in Hong Kong to a pledge not to serve shark fin soup or consume other shark products in the course of official business. Many others have privately committed to follow the ban but have asked not to named publicly.

Indeed, the number of shark conservation organisations in Hong Kong pressuring the government, the corporate community and the trade is at an all-time high. Social and mainstream media shows that public sentiment is shifting and the momentum against consumption of shark fin is continuing to build both here and abroad.

Increasingly people do understand the importance of sharks to our marine ecosystems. There is little doubt in most minds that protecting sharks is not a single-species issues.


Today is World Ocean Day and marine conservation organization, Bloom, seized the opportunity to launch a playful new short film, “A Shark’s Fin.”

Half animation and half live-interview format, the film tries to lightheartedly illustrate the problem with eating shark fin soup and let people know just what that apparently simple act of consumption means for our oceans.

Made by Hong Kong writer director, Crystal Kwok, executive produced by Elaine Marden and featuring actor Michael Wong as well as two adorable Hong Kong primary school students, the film targets the younger audience, with the view that they will educate their parents.

Please share the film – the more views, the more education and hopefully fewer bowls of shark fin soup will be consumed.

Remember, 73 million sharks are killed each year, mostly to  satisfy demand for shark fin soup and 50 percent of the global trade passes through Hong Kong. We can take a stand: Honor our oceans by refusing to eat shark fin soup before we lose  the majestic predators to extinction.

ADMCF recently spent time in Patna, in India’s Bihar state where we were looking at how we might work effectively with the Musahar community, which ranks at the bottom of the dalit or untouchable caste.

We found that there is apparently relatively little concrete information about or assistance given to the Musahar, whose name translates quite literally as the “rat-eaters.” Estimates of their numbers in Bihar and other states range from 2 million to as high as 5 million.

The Musahar fall so far down the well of the Indian caste system that by all accounts its people live in modern India much as they did 2,000 years ago. In an initiative that was perhaps telling about the regard in which the community is held, in 2008 the Indian government acted to help the Musahar by allowing the commercialization of rat meat.

A brief portrait of their situation gleaned from what is available online and through conversations in Bihar: In the villages around Patna in Bihar state, India, child marriage at 13 or 14 is still common, although illegal in India.

In the rural areas, Musahar are primarily bonded agricultural labourers, but often go without work for as much as eight months in a year.  Children work alongside their parents in the fields or as rag pickers, earning as little as 25 to 30 rupees daily.

The Musahar literacy rate is 3 percent, but falls below 1 percent for the women. Yet it is cast discrimination rather than parents that keep Musahari children away from schools. That said, the schools to which they have access apparently offer so little in the way of education that perception among the community is that schooling doesn’t offer them anything. And it is certainly true that even if they do manage an education certificate, discrimination means few manage to find jobs anyway.

By some estimates, as many as 85 percent of some villages of Musahars suffer from malnutrition and with access to health centres scant, diseases such as malaria and kala-azar, the most severe form of Leishmaniasis, are prevalent.

Besides eating rats, the Musahars are known for producing a good and cheap alcohol so not surprisingly alcoholism is rampant among the community, particularly the men.

Government development programs provide very little support to the Musahars. They are not recipients of housing schemes because generally they do not possess title deeds for their land. They are also the lowest number of recipients of loans from revolving funds within government schemes.  Thus the social support system bypasses them, as do private donations since so little is known about them.

The Dalit community in Bihar as a whole suffers frequent and often unpunished human rights violations. In the ten years before 2003, for example, 4243 cases of Dalit atrocities were registered in police stations, including 694 cases of murder, 1049 of rape, 1658 of severe injury and 842 cases of insult and abuse.

Into this picture walked Sudha Varghese 26 years ago, a nun who wanted to give voice to India’s dalits. The Musahars were the least advantaged of the dalits she could find and she moved into their community to truly understand their needs and way of thinking.

her organization, Nari Gunjan, was born to give voice to the Musahar women in particular. The organization now runs 72  primary education centres and a residential hostel/school for girls. Nari Gunjan promotes social, political, and economic empowerment for the women and girls. Beyond education, some of the centers provide vocational training and assist with micro-credit for Musahar women.

A decade ago, recognizing the need also to represent Musahar women in the courts, Sudha sent herself to law school and returned armed with a new skill set she has used to pursue the prosecution of ten rape cases that without her would have gone unpunished. In each case, she lead a column of Musahar women to the police stations to persuade officers to make the right arrest and in each case she has succeeded in putting the perpetrators behind bars, she says.

Known as the “bicycle nun” Sudha visits the various communities on her bicycle, and her fragile appearance belies a ferocious determination to provide Musahar children with education, self-esteem and purpose, its women with hope. For her courage, India’s national government recently awarded Sister Sudha the country’s highest civilian award, the Padmashri.

During a visit, the difference between children who attend her education centers and those who don’t was immediately apparent. Still, like any organization working in difficult circumstances that has been around for some time, achieving a constant flow of funding, even at the modest scale Nari Gunjan requires, is extremely hard. Some of the education centers have gone unfunded for 10 months although the teachers continue to work and the children appear.